The United States has expanded sanctions against Iran, aiming to cut off its economic lifeline, but stopped short of the most punitive measures, instead warning the world to cease business with Tehran. Treasury Secretary Scott Bessent cautioned that countries must sever ties with Iran or risk exclusion from the dollar-based financial system. This move comes as Chinese imports of Iranian crude have plummeted, dropping to 534,000 barrels per day in August, according to provisional Kpler data.
China's Oil Imports from Iran Decline Sharply
China, the largest buyer of Iranian oil for several years, has seen its imports fall dramatically since the US renewed its blockade of Iran's ships and ports in mid-July. Shipments fell to 785,000 barrels a day in June, the lowest since February 2023, then rose slightly to 823,000 in July, before dropping to 534,000 in August, per Kpler ship-tracking data. Earlier in the year, imports were 1.57 million barrels a day in February, slipping only marginally to 1.47 million in March during the early weeks of the war.
Chinese independent refiners, known as 'teapot' refineries, have been the main buyers of Iranian crude, attracted by steep discounts to mainstream barrels. They survive by purchasing cheap crude and turning it into petrol and diesel for neighboring provinces. In contrast, China's large state refiners have shunned Iranian oil since 2019, when the US reimposed sanctions, to avoid being cut off from the dollar-based financial system.
US Sanctions Target Chinese Refiners and Banks
Washington has intensified efforts to clamp down on Chinese purchases since President Donald Trump returned to the White House, imposing sanctions on smaller Chinese refiners and supply chain participants. In April, the US sanctioned Hengli Petrochemical's Dalian refinery and about 40 shipping firms, accusing Hengli of buying billions of dollars' worth of Iranian oil; Hengli has denied the allegation. The Treasury has also warned two larger Chinese banks of potential secondary sanctions if Iranian funds moved through their systems, but has not designated them.
Despite these actions, past sanctions have done little to slow overall flows of Iranian oil into China. Iranian oil delivered to China has often been branded as Malaysian or Indonesian and settled in Chinese currency, involving hard-to-track intermediaries, according to refinery sources and traders.
China and Iran Respond to US Pressure
China's foreign ministry stated that sanctions and pressure tactics do not help and that Beijing would protect its interests, rejecting unilateral sanctions and calling for diplomatic resolution. Iranian economy minister Ali Madanizadeh told state television that neither China nor Russia had 'accepted' the US measures, predicting other countries would resist. He said: 'Naturally, the enemies intend to launch an economic terrorist attack on us, but we also have our own tools and know how to play the game.'
Experts note Washington is wary of Chinese retaliation for any sanctions on its banks, especially ahead of talks next month between Trump and Chinese leader Xi Jinping, with curbs on China's critical minerals exports being particularly sensitive. The US blockade has already cut much of the oil flows, but the impact on China's imports and potential countermeasures remains to be seen.
